Essay on Homework Assignment Ch1-2

In 2014, Sedki, Sedki, Strickland concluded that GAAP is complicated for people to use. It provides more than two hundred industry specific rules for different firms to recognize revenue. Therefor there is no effective regulation for people to use when they need to

Publicly traded companies are subject to the reporting and disclosure requirements of the Securities Exchange Commission (SEC). The laws that govern the securities industry were established to provide transparency to investors, creditors and shareholders alike. According to Hoyle, Schaefer & Doupnik, (2015) there are seven major disclosure requirements, the first being a five-year summary of operations to encompass sales, assets, income from continuing operations. Followed by a description of business activities, a three year summary of industry segments to include foreign and domestic operations, a list of company directors and executives, quarterly market price of common stock for the last two years, restrictions on the company’s ability to continue paying dividends, and finally, an analysis of the company’s financial condition, changes in the conditions and results of operation.

SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the

GAAP, but are provided here to give the statement users a more precise understanding of the financial position of the entity.

Upon reviewing your post, the insights I gain are the importance of companies following the rules and regulations enforced by The Securities and Exchange commission (SEC). In addition to the (SEC) financial accounting are also monitor by the Financial Accounting Standards Board (FASB) regulate the financial statements issued to shareholders. Zimmerman, J. L. (2014). I also realized the importance of companies making certain that the financial information posted, is accurate. By doing so, they help others such as stockholders and investors to make decisions that will be most beneficial to them.

The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. See 15 U.S.C. § 78m. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting

Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements. False (all companies must comply to all standards and all disclosure requirements).

Legally speaking, yes. Ethically speaking, no. GKCO did comply with U.S. generally accepted accounting principles (GAAP) in regards to making adequate disclosures in the footnotes (Arens 48.) However, GKCO should not have relied that anyone not familiar with footnotes disclosures would have read those footnotes.

The GAAP that requires accountants to include, in the context of financial reporting, all information that is significant to the users of financial statements is called:

GAAP (Generally Accepted Accounting Principles) determine the content and format of financial statements. SEC (Securities and Exchange Commission) requires publicly traded companies to issue annual audit. Concerns are about adequacy of disclosure; and behavioral implications are secondary.

The purpose of US GAAP disclosure notes is to make sure all business entities should run smoothly, legally, and they should apply the right way of accounting practices in the business. Furthermore, companies enable to provide additional, new, interested and fact information for external and internal users. Because of that US GAAP requires the full disclosure notes. Companies enable to provide all significant issues of the effect and affect of financial activities of the business. Users easily understand significant accounting policies in the financial statements.

According to George Boykin, “GAAP is a set of accounting rules and procedures that companies used to compile and report their financial statements.” GAAP rules provide consistency in financial reporting (Wilkinson, 2013).

Performance standards are a very integral part in the underlying business operations of any firm. Competition, particularly from foreign entities is becoming more intense. As such, standards must be created in order for companies to maintain their competitive advantage over their peers in a particular industry. One only needs to look at the auto industry to see how a lack of standards and oversight can be a detriment to business. Many foreign firms, due to competition have entered into the auto market that was once dominated solely

Every company is a little bit different from the last. They produce different products, or provide different services. Some companies are small town corporate start-ups, while others are giant national mega-conglomerates. Amidst all the potential differences, however, there is one large similarity. The Generally Accepting Account Principles (GAAP). When it comes down to it, all companies are playing by the same rules. Some rules can apply more to one company than another, but everyone uses the same rulebook. GAAP tells a company how to record, calculate, explain, or present anything and everything that could ever possibly occur.

Unlike IFRS it is not required under US GAAP to present a statement of financial position as the beginning of the earliest comparative period. However, SEC registrants are required to present statements of financial position as of the end of the current and prior periods.